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The Stochastic 2 Step


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#1 David

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Posted 07 October 2013 - 03:36 PM

Author: David

Indicators Used: Stochastics (Signal line only, main is not used.)  Draw levels at 85 and 15.

 

Call Opportunity :

  1. A candle must close with stochastics below the 15 level.
  2. Draw a horizontal line on the HIGH of the candle that broke and closed below stochastics 15.
  3. Wait for 2 sets of upward candles (Note sets can be 1 candle or multiple).
  4. Enter on the touch of the bottom start of the 2nd downward set candle (not wick) for closest full 30 minutes expiry.

 

Put Opportunity : 

  1. A candle must close with stochastics above the 85 level.
  2. Draw a horizontal line on the low of the candle that broke and closed above stochastics 85.
  3. Wait for 2 sets of downward candles (Note sets can be 1 candle or multiple).
  4. Enter on the touch of the top start of the 2nd downward set candle (not wick) for closest full 30 minute expiry.

 

 

Example: 

 

Attached File  example.png   162.12KB   79 downloads



#2 marijan993

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Posted 07 October 2013 - 04:22 PM

D, would you mind explaining the logic behind this?



#3 David

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Posted 07 October 2013 - 11:17 PM

First off let me say that I like coming up with new / weird uses for indicators that people may not have thought of before.  Just a hobby of mine, so if you see me posting out of the box things, this is why.

 

The logic behind this is fairly simple.  I know many of us have messed around with stochastics previously and looked for overbought and oversold areas to try and catch reversals.  However how many times have you seen price keep going through and wondered when a great area would be to enter?  This particular strategy tries to capture a specific 30 minute reversal after we have seen 2 sets of failure candles for confirmation.  I hope that helps explain it a little more.


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#4 swede

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Posted 07 October 2013 - 11:34 PM

First off let me say that I like coming up with new / weird uses for indicators that people may not have thought of before.  Just a hobby of mine, so if you see me posting out of the box things, this is why.

 

The logic behind this is fairly simple.  I know many of us have messed around with stochastics previously and looked for overbought and oversold areas to try and catch reversals.  However how many times have you seen price keep going through and wondered when a great area would be to enter?  This particular strategy tries to capture a specific 30 minute reversal after we have seen 2 sets of failure candles for confirmation.  I hope that helps explain it a little more.

Bang on!  Early in my  spot trading career I used stochastics a lot, especially on 5 min occilations looking for scalps.  The one thing I had to overcome was the urge to jump on a trade too early instead of waiting for the stoch. to actually break under the 20 or 80 line.  Many times I thought I was in oversold or overbought zones, only to see price continue in the short term trend and the result I would be stopped out for 20 pips or so...So I totally get the logic of waiting for another couple of attempts to continue in the short term direction before considering a short or long...

 

I am very confident in my swing settings but I am not a good bin trader...so will certainly give this some screen time....good post..



#5 David

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Posted 07 October 2013 - 11:55 PM

Bang on!  Early in my  spot trading career I used stochastics a lot, especially on 5 min occilations looking for scalps.  The one thing I had to overcome was the urge to jump on a trade too early instead of waiting for the stoch. to actually break under the 20 or 80 line.  Many times I thought I was in oversold or overbought zones, only to see price continue in the short term trend and the result I would be stopped out for 20 pips or so...So I totally get the logic of waiting for another couple of attempts to continue in the short term direction before considering a short or long...

 

I am very confident in my swing settings but I am not a good bin trader...so will certainly give this some screen time....good post..

 

Thanks buddy!  :D



#6 marijan993

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Posted 08 October 2013 - 12:47 PM

First off let me say that I like coming up with new / weird uses for indicators that people may not have thought of before.  Just a hobby of mine, so if you see me posting out of the box things, this is why.

 

The logic behind this is fairly simple.  I know many of us have messed around with stochastics previously and looked for overbought and oversold areas to try and catch reversals.  However how many times have you seen price keep going through and wondered when a great area would be to enter?  This particular strategy tries to capture a specific 30 minute reversal after we have seen 2 sets of failure candles for confirmation.  I hope that helps explain it a little more.

 

I never thought  of this. I too love out of the box thinking, this is brilliant, D! Thanks.



#7 acuter

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Posted 08 October 2013 - 09:00 PM

David, Swede   Marijan933  et  al  -

 

This  strategy  came  out  about  40 +  years  ago  by  a  guru , NOT  a  trader  , ( by  his  own  admission ) named  Jake  Bernstein .

He  called  it   the  Stochastic  Pop , a misnomer,  since it  is  the  price  that  CONTINUES  to  pop  up  past  70 or 80 ;  or  below  20  or  30, not  the  Stoch.  itself . 

A college  Professor  named   David  Steckel  further  refined  it  in  an  article  in " Technical  Analysis  of  Stocks  and  Commodities " in  2000 . He  suggested  using a  rising  ADX  to  confirm  the  strength  of  the  seemingly  continuing  price  move "pops "  into   so-called    over/underbought  territory .

Bernstein  devised  the  Pop  for  Day  Trading , in  one  of  his  many  books , but  Steckel  suggested  a  Daily time  frame  . Tweaking  all  this  for  Bins , however ,  is  another  challenge ; and  finding  an  honest  broker  even  more  challenging .  


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